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The City of Vancouver has authorized lending up to $100-million to rescue the financially troubled Olympic athletes village project, The Globe and Mail has learned.

Council gave the city manager the mandate to advance the project's developer the money to help cover cost overruns and other shortfalls at an in camera meeting held Oct. 14. It has already advanced nearly $30-million. At that meeting, council approved spending up to $450,000 to bring in a third party to oversee management of the project being built by Millennium Development Corp.

Details of the city's involvement in bailing out the project's cash-strapped developer have until now been kept secret. Councillors are under a publication ban and have been told they face serious repercussions if they discuss publicly the decisions taken at the in camera meeting.

Growing controversy around the project also appears to be behind the yet-to-be announced resignation of the city's chief financial officer, Estelle Lo. Ms. Lo tendered her resignation recently after months of apparently expressing concerns the city might be assuming too much financial risk in an effort to meet its obligation to get the Olympic housing built on time, according to a source.

Ms. Lo was unavailable for comment. The city has already advanced close to $30-million to Millennium's lender, Fortress Investment Group, on behalf of the developer, a move believed to have been funded in part by the sale of treasury bills.

According to sources, the city has explored the possibility of accessing a $60-million line of credit with the Bank of Montreal that it hasn't used in years. This would be a temporary source of cash until the city could get the required funds for the financing through the selling of other investments, The Globe has learned.

The new financial obligations are on top of a $190-million loan guarantee the city had to give Fortress Investment Group, which has provided a $683-million loan to Millennium to build the 1,100-unit village.

The village is destined to become a residential complex after the Olympics but most of the condominiums have yet to be sold. Meantime, the value of real estate in Vancouver has plunged in the past several months and is expected to continue to decline over the next couple of years.

This has raised questions about the future of the project and whether Millennium, which agreed to pay the city $193-million for the land on which the village is being built, can still make the venture financially viable.

The latest revelations come despite assurances over the last several weeks by civic officials that financing around the project was not a concern. Other civic officials stated publicly there had not been any changes in the agreement the city had with Millennium - even after council had secretly agreed to forward the company and/or its lender up to $100-million to keep the project afloat.

At the Oct. 14 in camera meeting, council agreed to a motion that reads in part: "... council authorizes the city manager to make up to three protected advances and/or cash balancing payments under existing construction loan documents from Millennium Development in Southeast False Creek Area 2A up to a total aggregate amount of $100-million. Source of funding to be the Property Endowment Fund with interim financing to be the Capital Financing Fund. All such monies to be paid back to the city by Millennium with interest."

At the same meeting, council also agreed that "the city manager be authorized to allocate or expend up to $450,000 in temporary staff and/or contracted services to provide the city with oversight of Millennium's project management and critical milestones. Source of funding to be the Southeast False Creek Project Proforma budget."

The Globe has learned that one of the persons being considered for the oversight role is David Negrin, head of development arm of the Aquilini Investment Group.

Mr. Negrin is one of the most respected builders in Vancouver and his hiring would certainly demonstrate just how concerned the city is over the project's future.

It's uncertain how the bailout of the athletes' village has affected the city's Property Endowment Fund and Capital Financing Fund and to what extent there is much money left in either right now.

One institution that will be most interested in the current state of the city's finances is Standard and Poor's - the New York-based credit rating agency.

The city currently enjoys a Triple A credit rating with S&P. Whether it maintains it after officials from the agency visit the city this month to look at the books remains to be seen.

The agency might also be concerned about the departure of the city's chief financial officer, who by all accounts was a prudent fiscal manager who did not believe in taking chances with taxpayers' dollars.

One scenario being suggested for her resignation is that her conservative economic philosophy clashed with the views of others who were more concerned that the project be finished on time.

As of the end of October, Millennium was reported to be facing about $65-million in anticipated cost overruns. Fortress is said to have advanced the developer about half of the $683-million loan total.

The project is not quite at lock-up - the point at which the buildings are constructed and secure and inside work can commence.

It's generally held in the development world that costs after lock-up can be as or more expensive than the building phase.

The city has agreed to deliver the keys to the athletes' village to the Vancouver Organizing Committee by next October.

The city continues to hold legal title to the land, which would allow it to take over the project in a worst-case scenario.